U.S. Senator Arlen Specter (D-Pa.) has introduced an amendment to the larger
Wall Street reform legislation currently working its way through Congress
that would create a private cause of action against anyone who “knowingly
provides substantial assistance” to a primary violator of the federal
securities laws. Senator Specter, joined by several other senators, proposed
the amendment last week. Click
here to read the text of Senator Specter’s proposed amendment.
As discussed in one of our prior blog posts, “Specter Bill Awaits Mark-up,” Senator Specter had previously proposed a stand alone bill to
create a private cause of action for aiding and abetting liability under
the federal securities law. That bill is still tied up in committee.
The change of tactic, to include such a provision as part of a larger
bill, could provide a potential shortcut to its passage. Debate on the
Wall Street reform is likely to focus on other, more controversial issues
contained in the bill. Specter’s amendment, should it make its way
into the final version of the bill, would not likely occasion much debate.